Deutsche Bank post record '07 profit, limits subprime losses

Agencies|

Feb 07, 2008, 01.52 PM IST

FRANKFURT: Deutsche Bank, Germany's top lender, posted on Thursday record net profit of 6.5 billion euros (9.5 billion dollars) for 2007 after avoiding further large write-downs on the US subprime mortgage debacle in the fourth quarter.

The outcome represented a gain of of seven percent on the 2006 performance, Deutsche Bank said in a statement.

"We had no net write-downs related to sub-prime, CDO or RMBS exposures" in the fourth quarter, chairman Josef Ackermann said in the statement.

He was referring to the US market for high-risk or subprime mortgages and the complex financial instruments backed by home loans on which borrowers defaulted in large numbers last year, sparking a global credit crunch.

In the third quarter, Deutsche Bank had taken charges of 2.2 billion euros to cover losses linked to the crisis and posted a loss of 837 million euros as a result on trading income.

But Ackermann said Thursday that "those trading businesses in which we reported losses in the third quarter produced a positive result in the fourth quarter.

"In leveraged finance, where we had significant write-downs in the third quarter, net write-downs in the fourth quarter were less than 50 million euros."

The bank said 2007 pre-tax profit was up five percent to 8.7 billion euros.

Pre-tax return on equity, a key yardstick of profitability, slipped however to 29 percent from 33 percent a year earlier.

Deutsche Bank said it had taken provisions for credit losses of 612 million euros last year, compared to 298 million in 2006.

But it also said it would recommend a dividend payout of 4.50 euros per share, up 50 euro cents, or 12.5 percent.